/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE
SERVICES OR FOR DISSEMINATION IN THE
UNITED STATES/
Stelco Holdings Inc. fourth quarter highlights
include:
- Revenue of $424 million for
the quarter
- Shipments of 489,000 tons for the quarter
- Operating income of $39
million for the quarter, up from a loss in Q4 2019
- Adjusted EBITDA* of $60
million for the quarter, up 500% from Q4 2019
- Declared quarterly dividend of $0.10 per share payable on March 4, 2021
- Transformational year for the Company with extended
pellet agreement, acquisition of Minntac Option, completion of
blast furnace upgrade project, groundbreaking for new cogeneration
facility and installation of new pig iron caster
HAMILTON, ON, Feb. 17, 2021 /CNW/ - Stelco Holdings Inc.
("Stelco Holdings" or the "Company"), (TSX:
STLC), a low cost, integrated and independent steelmaker with one
of the newest and most technologically advanced integrated
steelmaking facilities in North
America, today announced financial results of the Company
for the three months and year ended December
31, 2020. Stelco Holdings is the 100% owner of Stelco Inc.
("Stelco"), the operating company.
Selected Financial Information:
|
|
|
|
|
|
|
|
|
(in millions Canadian
dollars, except volume, per share and nt figures)
|
Q4
2020
|
Q4 2019
|
Change
|
Q3 2020
|
Change
|
2020
|
2019
|
Change
|
Revenue
($)
|
424
|
435
|
(3)%
|
237
|
79%
|
1,517
|
1,841
|
(18)%
|
Operating income
(loss) ($)
|
39
|
(6)
|
NM
|
(69)
|
NM
|
(7)
|
50
|
(114)%
|
Net income (loss)
($)
|
(47)
|
(24)
|
(96)%
|
(88)
|
47%
|
(159)
|
20
|
(895)%
|
Adjusted net income
(loss) ($) *
|
45
|
(13)
|
NM
|
(81)
|
NM
|
(52)
|
42
|
(224)%
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share (diluted) ($)
|
(0.53)
|
(0.27)
|
(96)%
|
(0.99)
|
46%
|
(1.79)
|
0.23
|
(878)%
|
Adjusted net income
(loss) per common share (diluted) ($) *
|
0.51
|
(0.15)
|
NM
|
(0.91)
|
NM
|
(0.59)
|
0.47
|
(226)%
|
|
|
|
|
|
|
|
|
|
Average selling price
per nt ($) *
|
728
|
659
|
10%
|
683
|
7%
|
705
|
729
|
(3)%
|
Shipping volume (in
thousands of nt) *
|
489
|
633
|
(23)%
|
334
|
46%
|
2,020
|
2,444
|
(17)%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(loss) ($) *
|
60
|
10
|
500%
|
(39)
|
NM
|
75
|
141
|
(47)%
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(loss) per nt ($) *
|
123
|
16
|
669%
|
(117)
|
NM
|
37
|
58
|
(36)%
|
*
|
See "Non-IFRS
measures" for a description of certain Non-IFRS measures used in
this Press Release and "Non-IFRS Measures Reconciliation"
below.
|
NM = Not
Meaningful
|
"The fourth quarter completed what has been an unprecedented
year in the history of Stelco that saw us complete several
strategic priorities and generate exceptional returns for our
shareholders, including the highest total shareholder return in the
North American steel Industry*, even in the face of the ongoing
global pandemic," said Alan
Kestenbaum, Executive Chairman and Chief Executive Officer.
"The upgrade and modernizing projects, which resulted in
North America's only 'smart' blast
furnace, and the commissioning of our pig iron caster have
positioned Stelco to succeed across all points of the market cycle
by diversifying our product mix and modernizing our facilities.
These investments will be supported by our strategic, long-term
iron ore pellet supply agreement and our option to acquire 25% of
the high-quality, low cost Minntac mine. We increased our capacity
by more than 10% as a result of these investments and have also
made investments to support our continued development of the next
generation of high strength steels for the automotive market. We
have also secured an agreement with DTE Energy Services to
construct and operate an electricity cogeneration facility that
will further reduce our costs, increase energy reliability, and
improve our environmental footprint."
"These achievements take us into 2021 with renewed momentum and
further enhance Stelco's industry-leading cost position," continued
Kestenbaum. "Our end-markets are very strong as the broader economy
and our key markets continue to grow and diversify. Stelco is
positioned to capitalize on emerging opportunities, in particular
in the electric vehicle market, with increased capacity to produce
a full suite of products in response to market demands. While the
blast furnace upgrade project startup resulted in lower shipments
than in the fourth quarter of the prior year, we managed to
increase substantially our Adjusted EBITDA and Adjusted Net Income
year over year. Moreover, I am pleased to announce that we have
already, in just four short months after the restart of the
blast furnace, achieved several daily and weekly production records
for both hot metal and steel production and are excited about the
opportunities this project has created for our business. Our
strategic investment of more than $600
million into our facilities since mid-2017 has provided
Stelco's management team with the necessary tools to take full
advantage of our tactical flexibility model and capitalize on the
improved pricing we have witnessed through the early part of
2021."
Paul Scherzer, Chief Financial
Officer, added: "Throughout this period of strategic investment we
have remained focused on preserving the strength of our balance
sheet and maintaining a positive cash position. These policies,
combined with our strong alignment with our shareholders, have made
us one of the only publicly traded steel companies in North America that did not have to access the
debt or equity markets last year to support its business or its
capital investments. Now, as a result of the financial flexibility
our operations and balance sheet afford, we are pleased to
reinstate our quarterly dividend of $0.10 per share. Moreover, I want to highlight
that on the cost side, despite a quarter which included the
re-start of our steelmaking operations, we have already realized
many of the cost benefits of our blast furnace upgrade, as
evidenced by our strong Adjusted EBITDA of $123 per net ton in Q4."
_______________________________
|
* Total shareholder return is based on the year-to-date
change in share price from January 1, 2020 to December 31, 2020 in
respect of the following issuers: United States Steel Corporation,
Commercial Metals Company, Nucor Corporation, Steel Dynamics, Inc.,
TimkenSteel Corp., ArcelorMittal SA, and Cleveland-Cliffs
Inc.
|
Fourth Quarter 2020 Financial Review:
Compared to Q4 2019
Q4 2020 revenue decreased $11 million, or 3%, from
$435 million in Q4 2019, primarily due to a 23% decrease in
steel shipping volumes, partly offset by a 10% increase in average
steel selling prices and higher non-steel sales of
$50 million. Our shipping volumes decreased 144 thousand
nt, from 633 thousand nt in Q4 2019 to 489 thousand nt in
Q4 2020, primarily due to the impact of the Company's blast furnace
upgrade project completed during October
2020, and precautionary temporary suspension of steel
production in connection with the cyberattack during Q4 2020. The
average selling price of our steel products increased from
$659 per nt in Q4 2019 to
$728 per nt in Q4 2020. Non-steel
sales increased $50 million, from $18 million in Q4 2019
to $68 million during Q4 2020, mostly due to higher
metallurgical coke sales.
The Company realized operating income of $39 million for the quarter, compared to an
operating loss of $6 million in Q4 2019, a change of
$45 million consisting of a decrease in cost of goods sold of
$63 million, partly offset by a decrease in revenue of
$11 million and an increase in selling, general and
administrative expenses of $7 million.
Finance costs decreased by $23
million, from $13 million in
Q4 2019, due to the following: $14 million related to the
period-over-period impact of foreign exchange translation on U.S.
dollar denominated working capital and $12 million related to
the remeasurement impact from our employee benefit commitment,
partly offset by $3 million increase in interest on loans and
borrowings.
The Company realized a net loss of $47 million for the
quarter, compared to a net loss of $24 million in the fourth
quarter of 2019, a change of $23 million primarily due to the
following: $45 million increase in operating income and
$23 million in lower finance costs, more than offset by
$90 million decrease in finance and other income mainly due to
a loss on commodity-based swaps, and $2 million higher
restructuring and other costs. Adjusted net income totaled
$45 million in Q4 2020, an increase of $58 million
from an adjusted net loss of $13 million in Q4 2019.
Adjusted EBITDA in Q4 2020 totaled $60 million, an increase
of $50 million from $10 million in Q4 2019, which
reflects an increase in average steel selling prices, lower cost of
goods sold and higher non-steel sales during the period.
Compared to Q3 2020
Q4 2020 revenue increased $187 million, or 79%, from
$237 million in Q3 2020, primarily
due to a 155 thousand nt or 46% increase in steel shipping
volumes, from 334 thousand nt in Q3 2020 to 489 thousand
nt in Q4 2020, 7% higher average selling prices and an increase in
non-steel sales of $59 million.
The Company realized operating income of $39 million in Q4 2020 compared to an operating
loss of $69 million in Q3 2020, and an adjusted EBITDA of
$60 million compared to adjusted
EBITDA loss of $39 million during Q3 2020, which reflects the
impact of the Company's completed blast furnace upgrade project
during the period, and an increase in average selling prices and
non-steel sales.
Full Year 2020 Financial Review:
Revenue for 2020 decreased $324
million, or 18%, from $1.8
billion in 2019, primarily due to a 17% decrease in steel
shipping volumes and 3% lower average steel selling prices, partly
offset by higher non-steel sales of $33
million. Shipping volumes decreased from 2.4 million nt in
2019 to 2.0 million nt in 2020, mainly due to the impact of the
Company's completed blast furnace upgrade project, which included a
scheduled outage of our steelmaking facilities for approximately 11
weeks, resulting in significantly lower steel inventory available
for sale during the period. The average selling price for our steel
products decreased from $729 per nt
in 2019 to $705 per nt in 2020.
Non-steel sales increased $33
million, from $59 million in
2019 to $92 million in 2020, mostly
due to higher coke sales during the period.
Operating income for the year decreased $57 million, from
$50 million in 2019 to an operating loss of $7 million in
2020 consisting of a decrease in revenue of $324 million and
higher selling, general and administrative expenses of
$2 million during 2020, partly offset by lower cost of sales
of $269 million.
Finance costs increased $23 million, or 82%,
from $28 million in 2019, due to the following:
$14 million related to the remeasurement impact of our
employee benefit commitment, $8 million higher interest on
loans and borrowings, and $4 million related to the
period-over-period impact of foreign exchange translation on U.S.
dollar denominated working capital and the settlement of foreign
exchange forward contracts entered during the period, partly offset
by $4 million lower accretion expense associated with our
employee benefit commitment obligation.
Net loss for the year was $159 million, compared to
net income of $20 million in 2019, a change of
$179 million primarily due to the following; $94 million
decrease in finance and other income mainly due to a loss on
commodity-based swaps, $57 million in lower operating income,
$23 million in higher finance costs and a $7 million
increase in restructuring and other costs. Adjusted net income
decreased $94 million period-over-period, from
$42 million in 2019 to an adjusted net loss of
$52 million in 2020.
Adjusted EBITDA in 2020 totaled $75 million, a
decrease of $66 million
from $141 million in 2019, which reflects the
decrease in steel shipping volumes and average steel selling
prices, partly offset by higher non-steel sales during the
period.
Summary of Net Tons Shipped by Product:
(in thousands of nt)
|
|
|
|
|
|
|
|
|
Tons Shipped by
Product
|
Q4
2020
|
Q4 2019
|
Change
|
Q3 2020
|
Change
|
2020
|
2019
|
Change
|
Hot-rolled
|
373
|
382
|
(2)%
|
211
|
77%
|
1,454
|
1,699
|
(14)%
|
Coated
|
64
|
106
|
(40)%
|
76
|
(16)%
|
361
|
326
|
11%
|
Cold-rolled
|
15
|
40
|
(63)%
|
16
|
(6)%
|
81
|
89
|
(9)%
|
Other
a
|
37
|
105
|
(65)%
|
31
|
19%
|
124
|
330
|
(62)%
|
Total
|
489
|
633
|
(23)%
|
334
|
46%
|
2,020
|
2,444
|
(17)%
|
|
|
|
|
|
|
|
|
|
Shipments by
Product (%)
|
|
|
|
|
|
|
|
|
Hot-rolled
|
76%
|
60%
|
|
63%
|
|
72%
|
70%
|
|
Coated
|
13%
|
17%
|
|
23%
|
|
18%
|
13%
|
|
Cold-rolled
|
3%
|
6%
|
|
5%
|
|
4%
|
3%
|
|
Other
a
|
8%
|
17%
|
|
9%
|
|
6%
|
14%
|
|
Total
|
100%
|
100%
|
|
100%
|
|
100%
|
100%
|
|
a
|
Other includes slabs
and non-prime steel sales.
|
Statement of Financial Position and Liquidity:
On a consolidated basis, Stelco Holdings ended Q4 2020 with cash
of $59 million and $43 million available for advances
under the ABL revolver at December 31,
2020. The following table shows selected information
regarding the Stelco Holdings' consolidated balance sheet as at the
noted dates:
(millions of Canadian
dollars)
|
|
|
As at
|
December 31,
2020
|
December 31,
2019
|
ASSETS
|
|
|
Cash
|
59
|
257
|
Trade and other
receivables
|
183
|
158
|
Inventories
|
509
|
483
|
Total current
assets
|
791
|
914
|
|
|
|
Derivative
asset
|
133
|
—
|
Property, plant and
equipment, net
|
845
|
670
|
Total non-current
assets
|
988
|
680
|
Total
assets
|
1,779
|
1,594
|
|
|
|
LIABILITIES
|
|
|
Trade and other
payables
|
668
|
444
|
Derivative
liabilities
|
84
|
—
|
Asset-based lending
facility
|
15
|
8
|
Obligations to
independent employee trusts
|
36
|
35
|
Total current
liabilities
|
847
|
521
|
|
|
|
Asset-based lending
facility
|
113
|
90
|
Obligations to
independent employee trusts
|
462
|
472
|
Total non-current
liabilities
|
651
|
623
|
Total
liabilities
|
1,498
|
1,144
|
|
|
|
Total
equity
|
281
|
450
|
Stelco Holdings and its subsidiaries ended Q4 2020 with current
assets of $791 million, which is lower than current
liabilities of $847 million by $56 million. Non-current
assets include the derivative asset representing the US$100 million in payments made for the Minntac
option. Stelco Holdings' liabilities include $498 million of
obligations to independent pension and OPEB trusts, which include
$388 million of employee benefit commitments and
$110 million under a mortgage note payable associated with the
June 2018 land purchase. Non-current
liabilities of $651 million as at December 31, 2020 include $462 million of
obligations to independent pension and OPEB trusts. Stelco
Holdings' consolidated equity totaled $281 million at
December 31, 2020.
Completion of Strategic Capital Projects
On October 13, 2020, Stelco
Holdings announced that its wholly-owned subsidiary, Stelco,
successfully completed the blast furnace upgrade and reline project
at its Lake Erie Works Facility. It is expected that the upgrades
to our blast furnace will result in improved quality, increased hot
metal production of up to 300,000 net tons per annum, and a
reduction of up to $30 per net ton in
costs to produce our steel coils. As a result of this investment,
Stelco has achieved multiple production records, including a new
weekly record for hot metal production from the Lake Erie Works
blast furnace, as well as a weekly record for primary steel
production during the first week of February
2021.
On January 28, 2021, Stelco
Holdings announced that its wholly-owned subsidiary, Stelco,
successfully commissioned the new pig iron caster at its Lake Erie
Works facility which has the capability of casting up to one
million net tons of pig iron per year. The addition of the pig iron
caster to Stelco's operations further supports the Company's
tactical flexibility strategy and will allow the Company to
capitalize on increased capacity resulting from the recently
completed blast furnace upgrade project. Stelco's new pig iron
caster enables it to access the growing pig iron market created by
continued expansion of electric arc furnace production that is
increasing the demand for iron units and placing increased pressure
on the existing supply of scrap steel.
Declaration of Quarterly Dividend
Stelco's Board of Directors approved the payment of a regular
quarterly dividend of $0.10 per share which will be paid
on March 4, 2021, to shareholders of record as of the close of
business on February 26, 2021.
The regular quarterly dividend has been designated as an
"eligible dividend" for purposes of the Income Tax Act
(Canada).
Quarterly Results Conference Call
Stelco management will host a conference call to discuss its
results tomorrow, Thursday, February 18,
2021, at 9:00 a.m. ET. To
access the call, please dial 1 (888) 390-0546 or 1 (416) 764-8688
and reference "Stelco". The conference call will also be webcasted
live on the Investor Relations section of Stelco's web site at
https://www.stelco.com/investors. A presentation that will
accompany the conference call will also be available on the website
prior to the conference call. Following the conclusion of the live
call, a replay of the webcast will be available on the Investor
Relations section of the Company's website for at least 90 days. A
telephonic replay of the conference call will also be available
from 12:00 p.m. ET on February 18, 2021 until 11:59 p.m. ET on March 4,
2021 by dialing 1 (888) 390-0541 or 1 (416) 764-8677 and
using the PIN 075916#.
Consolidated Financial Statements and Management's Discussion
and Analysis
The Company's audited consolidated financial statements for the
year ended December 31, 2020, and
Management's Discussion & Analysis thereon are available under
the Company's profile on SEDAR at www.sedar.com.
About Stelco
Stelco is a low cost, integrated and independent steelmaker with
one of the newest and most technologically advanced integrated
steelmaking facilities in North
America. In addition to being North America's only integrated producer of
pig iron, Stelco produces flat-rolled value-added steels, including
premium-quality coated, cold-rolled and hot-rolled steel
products. With first-rate gauge, crown, and shape control, as
well as reliable uniformity of mechanical properties, our steel
products are supplied to customers in the construction, automotive
and energy industries across Canada and the
United States as well as to a variety of steel service
centres, which are regional distributers of steel products. At
Stelco, we understand the importance of our business reflecting the
communities we serve and are committed to making diversity and
inclusion a core part of our workplace culture, in part, through
active participation in the BlackNorth Initiative.
Non-IFRS Measures
This news release refers to certain non-IFRS measures that are
not recognized under International Financial Reporting Standards
("IFRS") and do not have a standardized meaning prescribed by IFRS.
These measures are not recognized measures under IFRS, do not have
a standardized meaning prescribed by IFRS and therefore may not be
comparable to similar measures presented by other companies.
Rather, these measures are provided as additional information to
complement those IFRS measures by providing further understanding
of our results of operations from management's perspective.
Accordingly, these measures should not be considered in isolation
nor as a substitute for analysis of our financial information
reported under IFRS. We use non-IFRS measures including "adjusted
net income", "adjusted net income per share", "adjusted EBITDA",
"adjusted EBITDA per nt", "selling price per nt", and "shipping
volume" to provide supplemental measures of our operating
performance and thus highlight trends in our core business that may
not otherwise be apparent when relying solely on IFRS financial
measures. We also believe that securities analysts, investors and
other interested parties frequently use non-IFRS measures in the
evaluation of issuers. Our management uses these non-IFRS financial
measures to facilitate operating performance comparisons from
period-to-period, to prepare annual operating budgets and
forecasts, and drive performance through our management
compensation program. For a reconciliation of these non-IFRS
measures, refer to the Company's "Non-IFRS Measures
Reconciliation" section below. For a definition of these
non-IFRS measures, refer to the Company's MD&A for the period
ended December 31, 2020 available
under the Company's profile on SEDAR at www.sedar.com.
Forward-Looking Information
This release contains "forward-looking information" within the
meaning of applicable securities laws. Forward-looking information
may relate to our future outlook and anticipated events or results
and may include information regarding our financial position,
business strategy, growth strategy, acquisition, opportunities,
budgets, operations, financial results, taxes, dividend policy,
plans and objectives of our Company. Particularly, information
regarding our expectations of future results, performance,
achievements, prospects or opportunities is forward-looking
information. In some cases, forward-looking information can be
identified by the use of forward-looking terminology such as
"plans", "targets", "expects" or "does not expect", "is expected",
"an opportunity exists", "budget", "scheduled", "estimates",
"outlook", "forecasts", "projection", "prospects", "strategy",
"intends", "anticipates", "does not anticipate", "believes", or
variations of such words and phrases or state that certain actions,
events or results "may", "could", "would", "might", "will", "will
be taken", "occur" or "be achieved". In addition, any statements
that refer to expectations, intentions, projections or other
characterizations of future events or circumstances may be forward
looking statements. Forward-looking statements are not historical
facts but instead represent management's expectations, estimates
and projections regarding future events or circumstances. The
forward-looking statements contained herein are presented for the
purpose of assisting the holders of our securities and financial
analysts in understanding our financial position and results of
operations as at and for the periods ended on the dates presented,
as well as our financial performance objectives, vision and
strategic goals, and may not be appropriate for other purposes.
Forward-looking information in this news release includes:
expectations that we will be able to successfully adapt to changing
market conditions and succeed across all points of the market cycle
by diversifying our product mix and modernizing our facilities with
upgrade and modernizing projects, such as, the recently completed
pig iron caster and blast furnace upgrade and reline project;
expectations that we will continue to operate the business as one
of the lowest-cost integrated steel producers in North America and that the foregoing
modernizing projects will further enhance our low-cost position;
our advancement of strategic initiatives and our intention to
continue making strategic investments in our business including
with respect to next generation, high strength steels for the
automotive market; expectations that we will sustainably achieve a
lower cost operating structure, increased steelmaking capacity, and
improved product quality as a result of the recently completed
blast furnace reline and upgrade project; expectations that the
construction of the cogeneration facility at our Lake Erie Works
will be completed on schedule and that the facility will further
reduce our costs, increase our energy reliability and improve our
environmental footprint; expectations that we will be able to fully
capitalize on a recovery in the steel market and that we will be
able to take advantage of the current pricing and demand
environment witnessed during the early part of 2021; expectations
that we will be able to capitalize on any opportunities that
emerge, particularly with respect to the electric vehicle market;
expectations that any increased production that we are able to
maintain will enable us to produce a full suite of products in
response to market demands; expectations that our current
operations and financial position will afford us financial
flexibility; expectations that we will be able to access the
broader market for pig iron; and expectations that the market
demand for pig iron will increase.
Undue reliance should not be placed on forward-looking
information. The forward-looking information in this press release
is based on our opinions, estimates and assumptions in light of our
experience and perception of historical trends, current conditions
and expected future developments, as well as other factors that we
currently believe are appropriate and reasonable in the
circumstances. Despite a careful process to prepare and review the
forward-looking information, there can be no assurance that the
underlying opinions, estimates and assumptions will prove to be
correct. Certain assumptions in respect of: our ability to complete
new capital projects on schedule and within budget and their
anticipated effect on revenue and costs; our ability to obtain all
applicable regulatory approvals required in connection with new
facilities; our ability to source necessary volumes of raw
materials and other inputs at competitive prices; our iron ore
pellet supply agreement providing us with competitively priced iron
ore pellets during the term of the agreement; our facilities
operating at design capacity; the market demand for iron units
continuing to face increased pressure; our ability to supply to new
customers and markets; our ability to effectively manage costs; our
ability to attract and retain key personnel and skilled labour; our
ability to obtain and maintain existing financing on acceptable
terms; currency exchange and interest rates; the impact of
competition; changes in laws, rule, and regulations, including
international trade regulations; our ability to continue to access
the U.S. market without any adverse trade restrictions; upgrades to
existing facilities remaining on schedule and on budget and their
anticipated effect on revenue and costs; and growth in steel
markets and industry trends, as well as those set out in this press
release, are material factors made in preparing the forward-looking
information and management's expectations contained in this press
release.
Key Assumptions Underlying Our Blast Furnace and Pig Iron
Production Estimates
The estimated cost efficiencies and production volumes
associated with the recently completed blast furnace upgrade and
reline project and the pig iron caster included in this press
release are based on a number of assumptions, including, but not
limited to, the following material assumptions: facilities
producing in accordance with design capacity, as applicable;
recently experienced increases in the production volume from our
LEW blast furnace remaining consistent on an annual basis;
expectations that the market for steel does not experience a
material adverse change; and expectations that our customers will
continue to purchase material volumes of production. Such
forward-looking information is subject to known and unknown risks,
uncertainties, assumptions and other factors that may cause the
actual results, level of activity, performance or achievements to
be materially different from those expressed or implied by such
forward-looking information, including: North American and global
steel overcapacity; imports and trade remedies; competition from
other producers, imports or alternative materials; and the
availability and cost of inputs placing downward pressure on steel
prices or increasing our costs; as well as those described in the
Company's annual information form dated February 17, 2021 and the Company's MD&A for
the period ended December 31, 2020
available under the Company's profile on SEDAR at
www.sedar.com.
There can be no assurance that such information will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. Accordingly,
readers should not place undue reliance on forward looking
information, which speaks only as of the date made. The
forward-looking information contained in this press release
represents our expectations as of the date of this news release and
are subject to change after such date. Stelco Holdings disclaims
any intention or obligation or undertaking to update publicly or
revise any forward-looking statements, whether written or oral,
whether as a result of new information, future events or otherwise,
except as required by law.
Selected Financial Information
The following includes financial information prepared by
management in accordance with IFRS. This financial information does
not contain all disclosures required by IFRS, and accordingly
should be read in conjunction with Stelco Holdings Inc.'s
Consolidated Financial Statements and MD&A for the period ended
December 31, 2020, which is available
on the Company's website and on SEDAR (www.sedar.com).
Stelco Holdings
Inc. Consolidated Statements of Income
(Loss)
|
|
|
|
Three months ended
December 31,
|
Years ended December
31,
|
(millions of Canadian
dollars)
|
2020
|
2019
|
2020
|
2019
|
Revenue from sale of
goods
|
$
|
424
|
$
|
435
|
$
|
1,517
|
$
|
1,841
|
Cost of goods
sold
|
367
|
430
|
1,476
|
1,745
|
Gross
profit
|
57
|
5
|
41
|
96
|
Selling, general and
administrative expenses
|
18
|
11
|
48
|
46
|
Operating income
(loss)
|
39
|
(6)
|
(7)
|
50
|
|
|
|
|
|
Other income
(loss) and (expenses)
|
|
|
|
|
Finance and other
income (loss)
|
(89)
|
1
|
(87)
|
7
|
Finance (costs)
recovery
|
10
|
(13)
|
(51)
|
(28)
|
Restructuring and
other costs
|
(7)
|
(5)
|
(13)
|
(6)
|
Share of loss from
joint ventures
|
—
|
(1)
|
(1)
|
(3)
|
Income (loss)
before income taxes
|
(47)
|
(24)
|
(159)
|
20
|
Income tax
expense
|
—
|
—
|
—
|
—
|
Net income
(loss)
|
$
|
(47)
|
$
|
(24)
|
$
|
(159)
|
$
|
20
|
Stelco Holdings
Inc.
Consolidated
Balance Sheets
(In millions of
Canadian dollars)
|
|
|
|
|
As at
|
December 31,
2020
|
December 31,
2019
|
ASSETS
|
|
|
|
|
Current
assets
|
|
|
Cash
|
$
|
59
|
$
|
257
|
Restricted
cash
|
8
|
8
|
Trade and other
receivables
|
183
|
158
|
Inventories
|
509
|
483
|
Prepaid expenses and
deposits
|
32
|
8
|
Total current
assets
|
$
|
791
|
$
|
914
|
|
|
|
Non-current
assets
|
|
|
Derivative
asset
|
133
|
—
|
Property, plant and
equipment, net
|
845
|
670
|
Intangible
assets
|
8
|
7
|
Investment in joint
ventures
|
2
|
3
|
Total non-current
assets
|
$
|
988
|
$
|
680
|
Total
assets
|
$
|
1,779
|
$
|
1,594
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
Trade and other
payables
|
$
|
668
|
$
|
444
|
Derivative
liabilities
|
84
|
—
|
Other
liabilities
|
44
|
34
|
Asset-based lending
facility
|
15
|
8
|
Obligations to
independent employee trusts
|
36
|
35
|
Total current
liabilities
|
$
|
847
|
$
|
521
|
|
|
|
Non-current
liabilities
|
|
|
Provisions
|
6
|
6
|
Pension
benefits
|
11
|
7
|
Other
liabilities
|
59
|
48
|
Asset-based lending
facility
|
113
|
90
|
Obligations to
independent employee trusts
|
462
|
472
|
Total non-current
liabilities
|
$
|
651
|
$
|
623
|
Total
liabilities
|
$
|
1,498
|
$
|
1,144
|
|
|
|
EQUITY
|
|
|
Common
shares
|
512
|
512
|
Accumulated
deficit
|
(231)
|
(62)
|
Total
equity
|
$
|
281
|
$
|
450
|
Total liabilities
and equity
|
$
|
1,779
|
$
|
1,594
|
Non-IFRS Measures Results
The following table provide
a reconciliation of net income (loss) to adjusted net income (loss)
for the period indicated:
|
Three months ended
December 31,
|
Years ended December
31,
|
(millions of Canadian
dollars)
|
2020
|
2019
|
2020
|
2019
|
Net income
(loss)
|
$
|
(47)
|
$
|
(24)
|
$
|
(159)
|
$
|
20
|
Add
back/(Deduct):
|
|
|
|
|
Loss from
commodity-based swaps, net
|
86
|
—
|
90
|
—
|
Restructuring and
other costs 1
|
7
|
5
|
13
|
6
|
Remeasurement of
employee benefit commitment 2
|
(11)
|
1
|
(12)
|
(26)
|
Transaction-based and
other corporate-related costs 3
|
8
|
3
|
12
|
6
|
Share-based
compensation expense 4
|
2
|
1
|
4
|
2
|
Tariff-related
costs
|
—
|
—
|
—
|
19
|
Separation costs
related to USS support services
|
—
|
—
|
—
|
9
|
Carbon tax
recovery
|
—
|
(1)
|
—
|
—
|
Batch annealing
facility startup related costs
|
—
|
—
|
—
|
1
|
Property related idle
costs included in cost of goods sold
|
—
|
2
|
—
|
5
|
Adjusted net
income (loss)
|
$
|
45
|
$
|
(13)
|
$
|
(52)
|
$
|
42
|
1
|
Restructuring and
other costs primarily includes the write-down of certain capital
projects that are no longer being pursued by the Company,
representing aborted construction in progress costs without future
benefit to Stelco, and demolition costs for certain buildings (and
other assets) not connected to the Company's ongoing operations.
For 2019, restructuring and other costs includes certain employee
termination benefits and consulting costs.
|
2
|
Remeasurement of
employee benefit commitment for change in the timing of estimated
cash flows and future funding requirements.
|
3
|
Represents certain
non-routine items that include, but are not limited to,
professional and consulting fees in connection with the cyberattack
and acquisition of the Option during 2020, and Stelco Inc.'s
withdrawn proposed senior secured notes offering during September
2019.
|
4
|
Share-based
compensation consists of costs connected with the Company's
long-term incentive plan for certain employees (including members
of the Company's executive leadership team), during the
period.
|
The following table provides a reconciliation of net income
(loss) to adjusted EBITDA for the periods indicated:
|
Three months ended
December 31,
|
Years ended December
31,
|
(millions of Canadian
dollars, except where otherwise noted)
|
2020
|
2019
|
2020
|
2019
|
Net income
(loss)
|
$
|
(47)
|
$
|
(24)
|
$
|
(159)
|
$
|
20
|
Add
back/(Deduct):
|
|
|
|
|
Loss from
commodity-based swaps, net
|
86
|
—
|
90
|
—
|
Depreciation
|
14
|
13
|
66
|
51
|
Finance costs
(recovery)
|
(10)
|
13
|
51
|
28
|
Restructuring and
other costs 1
|
7
|
5
|
13
|
6
|
Transaction-based and
other corporate-related costs 2
|
8
|
3
|
12
|
6
|
Share-based
compensation expense 3
|
2
|
1
|
4
|
2
|
Finance
income
|
—
|
(2)
|
(2)
|
(6)
|
Tariff related
costs
|
—
|
—
|
—
|
19
|
Separation costs
related to USS support services
|
—
|
—
|
—
|
9
|
Property related idle
costs included in cost of goods sold
|
—
|
2
|
—
|
5
|
Batch annealing
facility startup related costs
|
—
|
—
|
—
|
1
|
Carbon tax
recovery
|
—
|
(1)
|
—
|
—
|
Adjusted
EBITDA
|
$
|
60
|
$
|
10
|
$
|
75
|
$
|
141
|
|
|
|
|
|
Adjusted EBITDA as
a percentage of total revenue
|
14%
|
2%
|
5%
|
8%
|
1
|
Restructuring and
other costs primarily includes the write-down of certain capital
projects that are no longer being pursued by the Company,
representing aborted construction in progress costs without future
benefit to Stelco, and demolition costs for certain buildings (and
other assets) not connected to the Company's ongoing operations.
For 2019, restructuring and other costs includes certain employee
termination benefits and consulting costs.
|
2
|
Represents certain
non-routine items that include, but are not limited to,
professional and consulting fees in connection with the cyberattack
and acquisition of the Option during 2020, and Stelco Inc.'s
withdrawn proposed senior secured notes offering during September
2019.
|
3
|
Share-based
compensation consists of costs connected with the Company's
long-term incentive plan for certain employees (including members
of the Company's executive leadership team), during the
period.
|
SOURCE Stelco